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TGT vs. BURL: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Retail - Discount Stores stocks have likely encountered both Target (TGT) and Burlington Stores (BURL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Target has a Zacks Rank of #2 (Buy), while Burlington Stores has a Zacks Rank of #5 (Strong Sell) right now. This means that TGT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

TGT currently has a forward P/E ratio of 14.98, while BURL has a forward P/E of 25.04. We also note that TGT has a PEG ratio of 0.91. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BURL currently has a PEG ratio of 1.90.

Another notable valuation metric for TGT is its P/B ratio of 8.10. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BURL has a P/B of 15.91.

These metrics, and several others, help TGT earn a Value grade of A, while BURL has been given a Value grade of C.

TGT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TGT is likely the superior value option right now.


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Target Corporation (TGT) : Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
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